Forexpros – U.S. softs futures were higher during early U.S. morning trade on Thursday, consolidating above the previous session’s multi-month lows, though further downside was seen amid growing concerns over the outlook for the euro zone and the global economy.
Farm commodities shrugged off a stronger U.S. dollar, as concerns over the effects of the deepening debt crisis in the euro zone and its impact over the global economy kept safe haven demand for the greenback well supported.
Instead, traders returned to the market to seek cheap valuations following the previous day’s sell-off.
On the ICE Futures U.S. Exchange, sugar futures for July delivery traded at USD0.1966 a pound, gaining 0.75%. It earlier rose by as much as 0.81% to trade at a session high of USD0.1968 a pound.
Prices fell to as low as USD0.1936 a pound on Wednesday, the lowest since August 27, 2010.
Despite, the rare upward move, market analysts expected prices to fall even further after breaking below the key support level of USD0.2000 earlier in the week.
According to technical traders, the next level of support is seen close to the USD0.1920-level.
Sugar prices have been under pressure in recent weeks, losing nearly 26% since March 20, as increasing competition for U.S. exports and ample global supplies have been dominating sentiment.
Market participants noted that the sugar market remains in a major bear trend. Prices are down approximately 45% since hitting a three-decade high of USD0.3594 in February of last year.
Elsewhere on the ICE Futures U.S. Exchange, Arabica coffee for July delivery traded at USD1.6813 a pound, climbing 1.1%. It earlier rose by as much as 1.5% to hit a session high of USD1.6897 a pound.
Coffee prices plunged nearly 5% on Wednesday to as low as USD1.6515 a pound, the lowest since August 27, 2010.
Coffee’s losses were exacerbated by heavy fund selling and speculative liquidation triggered by growing fears over a possible Greece exit from the euro zone.
Market players said the liquidation triggered several waves of automatic sell orders to boost volume. Prices remain vulnerable to even steeper losses as funds continue to hold a significant net short position on Arabica coffee.
Coffee prices have been under pressure in recent months, losing nearly 28% since mid-January as traders eyed a huge harvest in top grower Brazil and speculators pushed prices lower.
Brazil is the world’s largest producer and exporter of Arabica coffee.
Meanwhile, cotton futures for July delivery traded at USD0.7299 a pound, rallying 2.1%. It earlier rose by as much as 2.35% to trade at a daily high of USD0.7338 a pound.
Cotton prices slumped to USD0.7058 a pound on Wednesday, the lowest since February 2010, as speculative selling weighed.
Traders said that aside from fears over the euro zone, cotton was also pressured by talk that China may be selling some of its state reserves and that some cancellations of U.S. cotton exports may have taken place as the price tumbled.
The fiber has plunged almost 65% from a record in March 2011 as higher prices prompted farmers to plant more crops and demand in top consumer China slowed.
The U.S. is the world’s biggest exporter of cotton and the third largest producer of the fiber, trailing only China and India.
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